PROPOSED RULES
INSURANCE COMMISSIONER
Original Notice.
Preproposal statement of inquiry was filed as WSR 12-11-125.
Title of Rule and Other Identifying Information: Long-term care partnership -- Inflation requirements.
Hearing Location(s): Insurance Commissioner's Office, TR 120, 5000 Capitol Boulevard, Tumwater, WA 98504-0255, on August 27, 2012, at 9:00 a.m.
Date of Intended Adoption: August 30, 2012.
Submit Written Comments to: Kacy Scott, P.O. Box 40258, Olympia, WA 98504-0258, e-mail kacys@oic.wa.gov, fax (360) 586-3109, by August 24, 2012.
Assistance for Persons with Disabilities: Contact Lorrie [Lorie] Villaflores by August 24, 2012, TTY (360) 586-0241 or (360) 725-7087.
Purpose of the Proposal and Its Anticipated Effects, Including Any Changes in Existing Rules: This proposed rule would allow carriers who offer consumer price index (CPI) based inflation protection for partnership policies to offset any negative growth in CPI in a given year against positive growth in CPI in any subsequent year, so long as benefits are never decreased below zero for any given year.
Reasons Supporting Proposal: John Hancock submitted a petition for amendment so that four thousand of their policyholders would be eligible to participate in the partnership program.
Statutory Authority for Adoption: RCW 48.02.060 and 48.85.030.
Statute Being Implemented: Chapter 48.85 RCW.
Rule is not necessitated by federal law, federal or state court decision.
Name of Proponent: Mike Kreidler, insurance commissioner, governmental.
Name of Agency Personnel Responsible for Drafting: Kacy Scott, P.O. Box 40258, Olympia, WA 98504-0258, (360) 725-7041; Implementation: Beth Berendt, P.O. Box 40255, Olympia, WA 98504-0255, (360) 725-7117; and Enforcement: Carol Sureau, P.O. Box 40255, Olympia, WA 98504-0255, (360) 725-7050.
No small business economic impact statement has been prepared under chapter 19.85 RCW. The only businesses affected by this proposed rule are long-term care product insurers. None of the active, licensed long-term care product insurers in Washington state are domestic small businesses. Therefore, a small business economic impact statement is not required for this proposed rule.
A cost-benefit analysis is required under RCW 34.05.328. A preliminary cost-benefit analysis may be obtained by contacting Kacy Scott, P.O. Box 40258, Olympia, WA 98504-0258, phone (360) 725-7041, fax (360) 586-3109, e-mail kacys@oic.wa.gov.
July 18, 2012
Mike Kreidler
Insurance Commissioner
OTS-4869.2
AMENDATORY SECTION(Amending Matter No. R 2011-08, filed
10/31/11, effective 12/1/11)
WAC 284-83-410
Minimum standards for long-term care
partnership policies.
Every long-term care partnership policy
must meet the standards for long-term care policies or
contracts in chapters 48.83 and 48.85 RCW and this chapter,
unless specifically provided otherwise.
(1) As used in WAC 284-83-400 through 284-83-420, "qualified long-term care partnership policy" or "partnership policy" means a long-term care policy that meets all of the following additional requirements:
(a) The policy was issued on or after January 1, 2012, or exchanged as provided in WAC 284-83-415 on or after January 1, 2012, and covers an insured who was a resident of this state or of another state that has entered into a reciprocal agreement with this state when coverage first became effective under the policy.
(b) The policy is a tax qualified long-term care insurance policy as defined in Section 7702B(b) of the Internal Revenue Code of 1986 (26 U.S.C. 7702B(b)).
(c) The policy provides at least the following levels of inflation protection:
(i) If the policy is sold to an individual who has not
attained age sixty-one as of the date of purchase, the policy
must provide automatic annual compounded inflation increases
at a rate not less than three percent or automatic annual
compounded inflation increases at a rate based on changes in
the consumer price index((, not to be less than zero
percent)).
(ii) If the policy is sold to an individual who has
attained age sixty-one but has not attained age seventy-six as
of the date of purchase, the policy must provide automatic
simple inflation increases at a rate not less than three
percent or automatic inflation increases at a rate based on
changes in the consumer price index((, not to be less than
zero percent)).
(iii) If the policy is sold to an individual who has
attained age seventy-six as of the date of purchase, the
policy may, but is not required to, provide automatic
inflation increases at a rate based on changes in the consumer
price index((, not to be less than zero percent)).
(iv) If the change in the consumer price index is a negative number for the time period in question, the carrier may not apply the change in the index to reduce the benefit payable under the partnership policy. However, the carrier may offset this negative number against the next annual increase in the consumer price index to reduce the automatic inflation increase which would otherwise occur during that year. If the negative consumer price index exceeds the next annual increase in the consumer price index, it may be offset against multiple annual increases, the net effect of which may never be less than zero.
(v) For purposes of this section, "consumer price index" means the consumer price index for all urban consumers, U.S. city average, all items, as determined by the Bureau of Labor Statistics of the United States Department of Labor.
(2) Issuers must file a long-term care insurance policy for approval for use as a partnership policy. The long-term care Partnership Policy Certification Form must be completed and accompany the request for approval. The form is available on the commissioner's web site: www.insurance.wa.gov.
(3) Issuers requesting to make use of a previously approved policy form as a qualified state long-term care partnership policy must:
(a) Submit to the commissioner a Partnership Policy Certification Form signed by an officer of the company; and
(b) File for approval an amendatory rider or endorsement indicating the policy is partnership qualified.
(4) An issuer or its agent, soliciting or offering to sell a policy that is intended to qualify as a partnership policy, must provide to each prospective applicant a Partnership Program Notice found on the commissioner's web site: www.insurance.wa.gov, outlining the requirements and benefits of a partnership policy. The Partnership Program Notice must be provided with the required outline of coverage.
(5) A partnership policy issued for delivery in Washington must be accompanied by a Partnership Status Disclosure Notice found on the commissioner's web site: www.insurance.wa.gov, explaining the benefits associated with a partnership policy and indicating that at the time issued, the policy is a qualified Washington state long-term care insurance partnership policy. The Partnership Disclosure Notice must also include a statement indicating that by purchasing this partnership policy, the insured does not automatically qualify for medicaid.
[Statutory Authority: RCW 48.02.060 and 48.85.030. 11-22-068 (Matter No. R 2011-08), § 284-83-410, filed 10/31/11, effective 12/1/11.]